Kemper Overtime, Overruns

Last week, Mississippi Power announced a delay and an updated $5 billion price tag for the Kemper County gasification plant in its report to the Securities and Exchange Commission.

The Kemper County coal plant isn’t getting any cheaper according to a piece by Sun Herald reporter Mary Perez.

Last week, Mississippi Power announced a delay and an updated $5 billion price tag for the Kemper County gasification plant in its report to the Securities and Exchange Commission.

Perez explained,

“The plant that was expected to open in May won’t do so until the fourth quarter of 2014, the filing said. The delay of about half a year was because crews are behind schedule installing pipe and weather has been abnormally wet.”

Perez noted that the 2004 estimated plant cost was $2.2 billion. This has since risen to an estimated $4.02 billion in capped costs.

But these aren’t the only expenses:

“Add the cost of the lignite mine, the carbon dioxide pipeline and other exemptions from and exceptions to the capped costs and the total cost of the project now stands at $5 billion. Further schedule extensions and construction cost increase could occur, the filing said.”

Cost overruns grew by at least $1.14 billion in 2013 alone. Southern Company said it will charge shareholders for any part of the bill above capped costs and exclusions.

Mississippi Power will retain a $245 million grant from the U.S. Department of Energy but will lose $133 million in Phase I investment tax credits for missing Kemper’s opening deadline date.